Jun 23

Form 1099-K (May-2023)

This month I want to discuss the Form 1099-K.  This form is for reporting the payments of credit cards and third party network transactions.  It is prepared by the processing company and sent out to the business activities where it will be reflected in your business returns.  This will assist in determining the correct tax liability and will be part of your total gross income.  The 1099-K will reflects transactions where income is derived from a business the taxpayer owns, self-employment, gig economy activities and the sale of personal items and assets through online selling websites.  So, what do you do when you receive a Form 1099-K reflecting incorrect amounts.  You’ll have to contact the issuer of the form and request a corrected form.  This may not be an easy task.  Be prepared to have documentation to support your position.  I’m sure you’ll need this and if your efforts turn out futile, you are able to follow the IRS’s guidance on Understanding Your Form 1099-K.  The threshold filing requirement for 2022 and prior years was $20,000 sell transactions and/or 200 transactions per year.  The American Rescue Plan of 2021 changed the threshold to $600 sell transactions without any regards to the number of transactions for 2023 and future years.  This means just about anyone doing any kind of business activities will most likely receive a Form 1099-K.  I know I don’t have to say this, but accurate recordkeeping is upmost important even more.  IRS is tightening the reporting requirements.  They may not increase taxes on the middle and lower class taxpayers, but they definitely are increasing scrutiny to promote tax compliance on the middle and lower class taxpayers.  On another note, let’s talk about payments again.  You may have filed and extension due to the fact you couldn’t pay the tax lability resulting from the new W-4 calculation method.  With that, you are able to make payments utilizing the “Make a Payment” icon reflected on the irs.gov website.  You can make as many payments as you want for the tax liability for 2022, you can make payments for estimated tax payments for 2023, and other payment requirements.  It’s user friendly and simple to do.  You enter your pertinent information, checking account information, the amount you want to pay, hit submit it and you immediately receive a confirmation on your payment and a copy of your payment will be sent to your email address.  It beats writing a check and mailing it.  If you need help, my Associate Enrolled Agent or myself will be happy to assist you.  Give us a call.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.